Housing Help or More Bank Bailout?

Foreclosure National Politics

foreclosureLafayette More headlines, and more hopelessness seems to emerge around housing policy in the United States as both homeowners and others desperate about the economy desperately read between the lines looking for an answer and only finding more cluelessness, even as some nuggets of the Obama Administration’s failed policies continue to slip out.  This time the proposals floated have to do with refinancing houses with Fannie Mae and Freddie Mac guaranteed mortgages and renting homes facing foreclosures.

No one can puzzle out whether or not homeowners facing foreclosure or owing more than 125% of what is now the current value of the house would be allowed to refinance, thereby making their homes affordable again.  I suspect not.  This would knock too hard on the door that the banks have continued to fortify which would involve writing down the value of the properties to the market, rather than continuing to pretend to modify at the wildly inflated pricing.  The Times article in its last line importantly noted:  “American homeowners currently owe some $700 billion more than their homes are worth.”  My god in heaven until that issue is addressed there is no plan for beleaguered homeowners facing the threat of foreclosures.

A refinancing program that focuses on other homes than represented by that $700 billion problem would give banks and the housing industry a shot in the arm on closing costs and fees in the moribund housing market.  This is all window dressing, not housing policy!

A Treasury Department official was quoted revealingly that Treasury was now hoarding more than half of the money allocated by TARP for foreclosure relief (almost $25 billion!) which has been an abject failure on all counts saying they wanted to save it to help pay down the deficit.  What patsies:  this is more chicken feed for the chickenhearted!

As a footnote to all of this we have to read about Warren Buffett being a “white knight” trying to prop up Bank of America still wallowing in its mess, and a new debate over whether or not Capital One might be getting “too big to fail.”  These are not the real issues, friends.

The other proposal has to do with renting out homes facing foreclosures but that would require some money to operate, some concessions from the banks which have not given an inch yet, and some recognition that tenancy is part of the future paradigm of citizen wealth, just as home ownership has been in the past.

Unfortunately no political or financial figures have been willing to walk that bridge to the future yet, so we’re still all falling into the ravine.